Three-way deal on NAFTA closer, but caution remains

WASHINGTON — Apprehension was giving way to measured but mounting confidence Sunday that the fall finale to Canada’s long-running NAFTA drama may finally be at hand — with the famous unpredictability of the man in the White House giving all involved cause for caution.

Canadian Foreign Affairs Minister Chrystia Freeland and Ambassador to the U.S. David MacNaughton were in Ottawa taking part in an aggressive, long-distance push to get Canada into a trilateral free-trade deal with the U.S. and Mexico on the eve of a key congressional deadline.

Central to the discussions on Sunday was an effort to secure some sort of assurances that will allow Canada to avoid the dreaded Section 232 tariffs on steel, aluminum and auto exports, which U.S. President Donald Trump has either threatened or already imposed on national security grounds.

Trade experts briefed on the progress so far say an agreement is well within reach.

“They’re moving towards closing the deal — it’s really not a question of if, it’s a question of when,” said Daniel Ujczo, an Ohio-based international trade lawyer at Dickinson Wright who represents large U.S. automakers and auto-parts manufacturers.

“There’s just a lot going on, and not a lot of time to do it in . ... At the end of the day, U.S. negotiators are agreeing, but it still has to be the president that signs off, and who knows where he is on things.”

Both Ujczo and Hassan Yussuff, president of the Canadian Labour Congress and a member of the federal government’s NAFTA advisory council who was also briefed on the talks Sunday, say the question of how to deal with the Section 232 tariffs remains the central issue.

Ujczo said while Canada would rather have tariff protection spelled out when the deal is announced, he expects that as a compromise, all three countries will say they plan to meet again in the near future to hammer out the details of a detente on the tariff threat.

Trump, who has already imposed tariffs on Canadian steel and aluminum, has also repeatedly threatened to impose even more crippling levies on auto imports if a deal can’t get done.

A persistent threat of tariffs is “highly unusual in a trading relationship,” Yussuff said.

Ujczo said the two sides have also largely settled on a disputeresolution mechanism similar to that in the original NAFTA known as Chapter 19 — an issue that has long been a major stumbling block in the talks — and on a higher duty-free threshold for goods shipped into Canada: $100, up from $20.

The politically sensitive question of greater U.S. access to Canada’s dairy market is also no longer a hurdle, say sources familiar with the talks.